Post originally appeared on Cyprus Business Mail.
“Claimants include 676 individual and institutional investors asserting 434 separate claims against Cyprus,” Wilmington-based Grant & Eisenhofer law firm said in an emailed statement.
The claimants, who are all Greek nationals, were depositors and bondholders of Cyprus Popular Bank, also known as Laiki, and the Bank of Cyprus, lost a total of over €120m in deposits and bonds in 2013, an amount “confiscated by the Cyprus government”, the law firm said.
As part of Cyprus’s bailout in March 2013, depositors at Laiki lost all their deposits in excess of €100,000. Laiki was then forced to merge with Bank of Cyprus and bondholders lost their money as the bank was still short of capital even after bonds were converted into equity. In the case of Bank of Cyprus bondholders saw their bonds too converted into equity while their stake in the bank was diluted as the lender had to convert 47.5 per cent of uninsured deposits into equity, also as part of the bailout agreement.
Both Laiki and Bank of Cyprus lost a total of €4.5bn in Greece’s 2011 debt restructuring, which virtually wiped out Laiki’s capital.
Grant & Eisenhofer, the Philadelphia-based Kessler Topaz Meltzer & Check, the Naples, Florida- based Kyros Law and the London-based Volterra Fietta are the law firms representing the claimants and filed claims at the World Bank’s arbitration body, Grant & Eisenhofer said.
“The dispute will be adjudicated through binding arbitration,” the law firm said. “Investors earlier had filed a notice of dispute in July 2014, submitted pursuant to an investment treaty between Greece and Cyprus, which provides that the parties must first attempt to settle their dispute for at least six months. Typically in the ICSID forum, one arbitrator would be appointed by the Greek investors, one by Cyprus, and the third would be appointed by agreement, or by ICSID itself”.
“We have formally brought suit before ICSID after the Cyprus government failed to respond to our filing notice of the dispute and made no effort to negotiate,” said Jay Eisenhofer, co-managing director of Grant & Eisenhofer. “This is the first time that Greece and Cyprus’ bilateral treaty will be tested as a group action for large numbers of investors. We have since spent more than a year identifying the hundreds of claimants in this action, and anticipate additional claims of tens of millions of euros to be brought in the coming year.”
“We believe that Greek investors were singled out and discriminated against during the bailout, while Greek depositors were subject to extreme bailout measures, many public institutions of Cyprus were made exempt,” Eisenhofer added. “Our law firms have been coordinating litigation efforts in Greece for more than a year to work toward the recovery of investor funds”.
The law firm said that it has represented together with Kessler Topaz regularly investors in various cases in the past, including one against Royal Dutch Shell for “overstating its oil reserves in financial disclosures” forcing the energy company to pay more than $500m to investors.